Trinity Health Continues to Face COVID-19 Challenges Despite Funding from the CARES Act
Posted on 07/27/2020
Trinity Health, headquartered in Livonia, Michigan, is one of the largest Catholic healthcare systems in the United States. The healthcare giant had announced Monday, June 29, 2019 that it will continue to lay off and extend and install new furloughs for employees due to a possible resurgence of COVID-19 cases. Despite funding from the CARES Act, the Michigan based healthcare system continues to struggle from the effects COVID-19 has on its operations. As of May 22, 2020, the healthcare system had 178 days of cash-on-hand to meet its obligations. Fast forward to July 2020 and Trinity Health is still making cuts and furloughs based on the resumption of patient volume, among other factors.
During the stay-at-home orders, outpatient and elective services were shut down, causing Trinity Health’s revenues to fall. Its operational expenses increased due to the care of COVID-19 patients and the implementation of Trinity Health’s disaster plan. The institution of Trinity Health’s disaster plan, the reduction in outpatient and elective revenues, and the downturn in the market have resulted in a significant impact on Trinity Health’s financials. In an effort to reduce expenses, layoffs and furloughs were necessary, which were mostly in non-clinical, administrative functions.
In April and May, Trinity Health received US$ 600 million from the CARES Act. They also received US$ 1.6 billion of Medicare loans which must be repaid. The funding helped cover operational costs for the past few months but is not enough to cover future costs as the country faces a possible resurgence of the virus. Additionally, on April 9, 2020, Trinity Health filed a voluntary disclosure to increase liquidity through its credit facilities. Per the disclosure, “In light of the COVID-19 pandemic and the declining and volatile investment values in March 2020, Trinity Health recently reviewed its liquidity position and through four credit facilities has drawn US$ 885 million.” This draw on credit, in addition to freezing its capital expenditures, will help the hospital continue its operations. In December 31, 2019, Trinity Health had US$ 4,741,563,000 in investments. The endowment has exposure to hedge fund investments and other commingled funds in investments such as real estate.